Wall Street found more good cheer in the stock market today, particularly in the technology sector. The Nasdaq composite outperformed early Friday, up 0.5%, helped by an upside breakout for Broadcom (AVGO), which jumped more than 15% during the first half hour of trading. Fellow AI stock Nvidia (NVDA) followed Broadcom stock higher with a milder gain of 1%.
The Nasdaq 100 outperformed the composite, up 1%, helped by strength in other AI-related chip names like Marvell Technology (MRVL) and Arm Holdings (ARM). Arm extended gains after clearing a trendline Thursday. Now it has its sights set on a 164.16 entry.
↑ XBut indexes faded after the first half-hour of trading.
The S&P 500 trimmed its gain to 0.2%, while the Dow Jones Industrial Average was flat and the Russell 2000 small-cap index fell 0.3%. Headed into Friday, the S&P 500 was down 0.6% for the week, while the Nasdaq's weekly gain was around 0.2%. Weekly declines for the Dow Jones industrials and Russell 2000 were 1.6% and 1.9%, respectively.
Volume on the NYSE and Nasdaq exchange was slightly lower compared to the same time Thursday. The Nasdaq composite on Thursday suffered its second distribution day this week, falling 0.7% in higher volume. The first one was on Monday, when the index fell 0.6%, also in higher volume. It's important to keep tabs on distribution days on the Nasdaq and S&P 500. When they start to cluster, it almost always causes problems for a stock market uptrend.
Stock market breadth was slightly negative on both exchanges. Breadth has been a bit lackluster post-Thanksgiving as several large-cap technology stocks have resumed leadership roles.
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Besides Nvidia, American Express (AXP) and Travelers (TRV) also outperformed in the Dow with gains of around 1%.
Arista Networks (ANET) was a top gainer in the S&P 500, up around 4%. Arista uses Broadcom chipsets in its networking switches for data centers.
The 10-year Treasury yield added another four basis points to 4.36% and is up nearly 21 basis points so far this week — one reason why small caps have started to lag — ahead of next week's Federal Reserve meeting. The two-day meeting concludes Wednesday with the policy statement due at 2 p.m. ET. The Fed is widely expected to cut its key lending rate by another 25 basis points to a range of 4.25% to 4.5%.
Stocks held decent gains during the first half-hour of trading as the Nasdaq composite moved above the 20,000 level again to an all-time high.
Broadcom reported fiscal Q4 earnings and revenue that were mostly in line with expectations. But growth accelerated for the second straight quarter, and investors liked news that full-year AI revenue more than tripled to $12.2 billion. CEO Hock Tan also said the company is developing custom AI chips with three large cloud customers.
Broadcom scored a chart breakout Friday, gapping out of a double-bottom base with a 185.05 entry. Its market capitalization topped $1 trillion for the first time.
Earnings reports in the retail sector were also in focus. Leaderboard stock Costco (COST) rallied after earnings topped expectations and revenue came in mostly in line with expectations. Membership fees totaled $1.17 billion, up 8% year over year. E-commerce sales increased 13%.
RH (RH), formerly known as Restoration Hardware, surged nearly 14% after the company reversed a year-ago loss with adjusted profit of $2.48 a share. Revenue increased 8% to $811.7 million even though CEO Gary Friedman cited a weak housing market.
Investors liked full-year revenue guidance of 6.8% to 7.2%, up slightly from prior guidance of 5% to 7%. Note that some of RH's move today could be due to short covering. Headed into Friday, about 14% of RH's tiny float of 13 million shares was held short.
Follow Ken Shreve on X @IBD_KShreve for more stock market analysis and insight.
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